Saturday, February 16, 2013

An interesting video clip on Malaysian politics. Pakatan leader, Anwar Ibrahim is being accused of spy agent for the Malay, Chinese, Jewish, CIA, American, India, and many others. Thus, is he a "Super Agent 007"? Creatively, Anwar pronounced himself as "Agent Ubah" or "Agent of Change".

Brain
drain is a big problem for Malaysia since decades ago. Worst is this problem
inclined to Chinese ethnic, thus creating a time boom towards national
integration. Variety solutions and efforts were done but brain drain persists. Thus,
we try to propose some suggestions, hoping to contribute in lessening if not
reversing brain drain in Malaysia.

Hippocrates,
an ancient Greek physician who was known as father of Western medicine once
said “diseases were caused naturally”. Treating it as a disease of nature
imbalance, brain drain is like water flowing from higher ground to lower
ground. Once these grounds are balanced, the water will not be flowing again.

Solving Monetary Imbalances

An
important but not the only factor to make these grounds imbalances is monetary
rewards. Better career prospect, most probably due to higher salary in foreign
countries is identified as main drivers of brain drain. Unfortunately, to
balance domestic and foreign salary is a gigantic task. Please look at the
current scenario as in Table 1.

As
at 2011, among the main brain drain receiver countries are Singapore,
Australia, United States, United Kingdom, Canada, Brunei and New Zealand. Their
Gross National Income (GNI) per capital ranged from 3.00 times (New Zealand) to
8.02 times (United States) higher than Malaysia. GNI per capita is used to
represent aggregate income (salary). Assuming Singapore has zero growth for 8
years from 2011, Malaysia needed an annual growth rate of 25.93% to matched current
Singapore’s GNI per capita in year 2020. Malaysia needs annual growth rate of
more than 20% to match Australia, United States, United Kingdom and Canada.

Table 1: GNI per capita (constant 2000 US$) Ratio

Countries

Average

(2005 to 2011)

2011

Annual growth rate needed* (%)

Singapore / Malaysia ratio

6.29

6.32

25.93

Australia / Malaysia ratio

4.98

4.65

21.18

United States / Malaysia ratio

8.02

7.35

28.33

United Kingdom / Malaysia ratio

6.08

5.49

23.73

Canada / Malaysia ratio

5.31

4.89

21.96

Brunei / Malaysia ratio (2009)

3.89

3.59

17.33

New Zealand / Malaysia ratio (2010)

3.00

2.86

14.02

* Annual growth rate needed for
Malaysia to achieve foreign countries’ GNI per capita by 2020 (8 years from
2011). All data are sourced from World Bank.

Such
a big gap in income per capita needs to be balanced back. Three solutions are
suggested. Firstly, Malaysia needs to shift from low value-added to high
value-added product and services that give high income employment to local
talents. South Korea has chosen healthcare, contents, tourism, education and
green financing while Singapore has potential in chemicals, electronics, biomedical manufacturing and ‘HQ &
professional services’ as their high value industries.

Look at the ETP and other industrial policies, and you
will find that Malaysia seems like Jack of all trades but master of none. Thus,
we should be highly selective to choose very few industries to be developed
into global giant earning huge profit. Then, only local talent can be retained
with high salary.

Secondly, Malaysian agriculture sector should be
enhanced greatly to create high skill jobs and agribusiness opportunity for
local talents. Various Entry Point Projects (EPP) of ETP for agricultural
sector do needs lots of scientists, management and global marketing expertise
and entrepreneurs, hence helping to retain talents. For examples, more
scientists are needed for research on biodiversity of high-value herbal production
(EPP 1), developing aquaculture (EPP 4 and EPP 6) and increasing productivity
of paddy farming (EPP 10 and EPP 11). Management and marketing expertise needed
for commercialization and professional administration service for EPP 3, EPP 8
and EPP 9. Young graduates and other skilled labor have opportunity to be
entrepreneur locally in almost every EPP.

In view of this, our education system, especially at
the tertiary level, should be clear on two aspects, namely (i) matching the
economics needs with relevant courses or subjects, and (ii) planning the best
estimate number of talents needed to produce for each sector and sub-sector of
the economy, included modern agricultural sector. Failure to do the (i) may
results in our fresh graduates either over-qualified or under-qualified.
Failure to do the (ii) may results in over-supply or under-supply of talent.
Over-qualified and over-supply in turn may result in brain drain.
Under-qualified may result in unemployment of graduated in Malaysia, thus a
push factor for them to look for lower-level-jobs-but-higher-paid at overseas.

Third, the government should adopt policy for
strong exchange rate. Higher foreign currency relative to Malaysian Ringgit
greatly pushes away both our skilled and unskilled labor. United Kingdom Pound
is almost five times our currency value. Other countries’ currencies are two to
three times higher than us (see Table 2). Continuous inflation in Malaysia has made
domestic purchasing power worst.

(Rates are as at 15th January 2013.
Rates from Bank Negara Malaysia website)

Roughly, S$1500 to S$2500 salary for fresh degree
holder working in Singapore will translate into RM3682 to RM6137 in Malaysia.
Is this range of salary possible in Malaysia?

Stronger exchange rate might hurt export
competitiveness but with retained local talents, it is time for Malaysia to
upgrade its production level. We should not continue to compete with price but
compete with quality and brand distinctiveness.

Solving
Inferior Perception

Besides monetary imbalances, brain drain is also
caused by perception that “the moon overseas is brighter”. Working in a well
established multinational company in a developed country is a pride to local talent.
Thus, to reduce brain drain, policies to attract world top multinational
companies to Malaysia is like killing three birds with one stone. First, foreign
direct investment (FDI) for these companies will be huge, thus contributing to
future domestic output and income. Second, Inflow of such big amount of foreign
money will strengthen Malaysian Ringgit. Third, these FDIs usually come with
their management talents and technologies. Hence, the foreign top multinational
do create jobs for local talents and impart better technology and knowledge to
the locals. Big multinational companies are keen to operate in Asia due to
lower production cost. Yet, at the same time, these companies do offer good
employment to both unskilled and skilled workers. Thus, specific privilege like ten years tax
incentive should be tied with retaining and developing local talents as well as
job creation to both skilled and unskilled workers.

This solution has been applied by countries such as
Indonesia. For example, Indonesia has been attracting Nestle to expand its
product line there. In 2013, Nestle will have new plant at Karawang to start
new production of Milo and Nestle Cerelac. One will notice that current Nike
football jerseys are made in Indonesia. Nike provides 171,276 jobs at
Indonesia, 318,335 at China, 312,114 at Vietnam and 24,718 at Bangladesh but
only 8,337 at Malaysia. Furthermore, 62% of workers at Nike factories in
Malaysia are migrants as contrast to less than 4.5% in other mentioned
countries. Thus, how can we improve the employment opportunities and salary of
workers in Malaysia?

Solving
Social Injustice and Other Imbalances

Social injustice needs to be solved too. This is
the second highest push factor for brain drain, especially for the Chinese.
Solution is simple to say, yet difficult to implement. It involves a lot of
sensitive issues and constitution matters. Nonetheless, there are still many
spaces for meritocracy such as education opportunity, scholarship, grants,
employment in public sector and recognition of achievement.

Last but not least is the accumulation of many
minor factors. These include crime, green environment, transportation matter
and human rights. Increasing scary stories of crime happening in our
neighborhood do help to encourage Malaysian to work at other safer countries
like Singapore. Indirectly, efforts and policies to fight crime are important
to solve brain drain. So do reducing pollution and radioactive risk, improving
public transport and ensuring high standard of human rights. These could help
to retain Malaysian brain in the country.

Conclusion:
Can it be solved?

It is easier to start new than to disentangle
decades of mess. The matter is we cannot start new without disentangling the
past problems. If we took are to solve brain drain diligently and
wholeheartedly, time will prove that things will get better.

[Chinese version published at Nanyang Press, 4th
February 2013. Available online at http://www.nanyang.com/node/509198?tid=687.
This English version may be slightly different from the Chinese / newspaper
version]